THIS
CAUSE comes before this Court upon the
Plaintiff's Amended Motion for Temporary Restraining
Order and/or Preliminary Injunction (DE 24) and the two
Motions for Hearing (DE 8 and 37). Having reviewed the
Motions and the Defendants' Response to the Amended
Motion for injunctive relief, noting that the Plaintiff filed
no Reply, this Court finds as follows:

BACKGROUND

1. This
case concerns a failed franchise relationship. The Plaintiff
is the franchisor. It owns the “3 Natives” juice
cafe franchise. It licensed the right to operate a “3
Natives” juice cafe in Stuart, Florida to “3
Natives Stuart, LLC”, the franchisee. Mary Miller
signed the Franchise Agreement as the corporate manager of 3
Natives Stuart LLC and as its guarantor. The Franchise
Agreement that created that franchise relationship either was
rescinded (according to the Defendants) or terminated
(according to the Plaintiff). Each side blames the other for
breach of contract. The Plaintiff-franchisor came to court
first, suing the Defendant-franchisee and those associated
with it.

2. The
Franchise Agreement that underlies this lawsuit is found at
¶ 19-1. One of that contract's primary concerns is
the protection of the Plaintiff-franchisor's intellectual
property assets (trademarks, proprietary information, trade
secrets, trade dress, reputation, and goodwill). The contract
refers to the Plaintiff's “System” as the
term that summarizes that total collection of intellectual
property assets. The proprietary “System” that
the contract seeks to protect concerns “the
establishment, development and operation of” the
franchise; its offering of premium smoothies, juices, and
other light food items based on proprietary recipes;
maintenance of uniform standards, policies, and procedures;
and so forth. In the contract the Plaintiff-franchisor
represents that it has developed its comprehensive franchise
“System” “through significant expenditures
of time, skill, effort and money”.

3. This
Court recounts the history of the negotiations for and the
parties' experience with the Stuart cafe for context and
background. This Court draws that history from what is
pleaded in the Amended Complaint, the Motion and Response,
and the various attachments thereto including affidavits from
the relevant parties. For ease of reference, this Court
refers to “the Defendants” in the plural,
consisting of the principal Defendant, 3 Natives Stuart, LLC,
who is the franchisee (the party who entered the Franchise
Agreement) and Defendant Mary Miller who signed the Franchise
Agreement as guarantor. Because they are the parties to the
contract, they are the principal Defendants who are defending
against the Plaintiff's request for injunctive relief and
hence the principal Defendants who are subject of the below
discussion.

4. The
“3 Natives” franchise has grown from a single
cafe in Tequesta, Florida, and the franchise company is still
based there. That first cafe opened in 2013, roughly three
years before the Defendants opened their cafe in Stuart. As
of the time of this lawsuit, the Plaintiff claims the
existence of twelve cafes in total from Palm Beach County to
Tallahassee, with five more planned to open in Florida and
Texas. In early 2016 the Plaintiff (through a sibling LLC)
obtained trademark registration for the name “3
NATIVES” and for the circular graphic design that
incorporates that name into a palm tree drawing above the
words “raw-natural-fresh”. Those two trademark
registration documents are at ¶ 19-2.

5. Mary
Miller is the owner of a health club gym in Stuart, Florida,
and her cousin, Michael McLaughlin, manages it. Mr.
McLaughlin asked Phillip Bambino, the owner and managing
member of 3 Natives Franchising LLC, if someone was
interested in opening a “3 Natives” cafe inside
their gym. Rather than bring in an independently operated
cafe, Mr. Bambino suggested that the Defendants become
franchisees which he said would be the more financially
advantageous to them. He made various representations about
the franchise's financial performance to-date and the
expected financial performance of the Defendants' cafe.
He also stressed the practical advantages of the
franchise's already established “System” and
food commissary. Those two factors were key to the
Defendants' decision to become a “3 Natives”
franchisee because they had no food service experience of
their own. The Defendants' plan was to rely on the
Plaintiff for that support.

6. The
parties signed the Franchise Agreement on April 29, 2016. The
Defendants paid $30, 000 and agreed to pay a monthly 6% gross
revenue royalty fee. The contract gave the Plaintiff various
inspection and accounting rights. The Defendants agreed to
abide by the Plaintiff's operating standards and to
protect its “System” of proprietary information.
The Defendants agreed to restrictive covenants such as a
non-compete agreement. The contract had a ten year term.

7. In
sharp contrast to how the Franchise Agreement describes the
Plaintiff's well-developed “System”, in
practice the Plaintiff gave them very little support in
setting up and operating the cafe, the Defendants complain.
What information they did receive was of no true proprietary
value. They were left to figure everything out on their own.
After Mr. Bambino had received payment of the fee and had set
up the point-of-sale system to ensure notification of all
sales activity, he no longer was in touch. The Plaintiff
never inspected the Defendants' premises or lease
arrangement. The Plaintiff did not complaint about the
cafe's lack of a dedicated telephone line; instead the
cafe shared the gym's already existing telephone line.

8. They
were left to figure out on their own how to physically
construct and build out the cafe space, the Defendants
complain. They received no substantive training. The
Plaintiff's operating manuals conveyed no helpful or
proprietary information. The manuals were brief and offered
nothing more than generally known business information. There
was no proprietary food preparation information; the
Defendants taught themselves how to prepare the food. The
contract bound the Defendants to vendors and suppliers who
overcharged them for commonly available products that they
could have sourced more cheaply on their own. What
operational advice they did receive was unhelpful. What food
recipes and food preparation techniques that the Plaintiff
did give them were unpopular with customers. The Defendants
had to figure out how to implement the marketing strategy on
their own and had to pay for it out of their own pocket.

9.
Several key features of the franchising arrangement upon
which the Defendants had relied did not pan out as
anticipated. For one, they had hoped for the help of Allan
Turner who at the time managed the franchise's flagship
cafe. The Defendants were so dependent on Mr. Turner for
operational help that they gave him equity in their business.
Three weeks before the Defendants opened their cafe, the
Plaintiff fired Mr. Turner. Afterwards Mr. Turner came to the
Defendants to inform them that the Plaintiff had threatened
him and that he could not work for the Defendants as planned.
In Mr. Turner's place, the Plaintiff sent another one of
its employees. As the Defendants put it, Mr. Turner's
replacement “proved to be unfit to manage a 3 Natives
Cafe”. Secondly, the Plaintiff stopped offering its
commissary service whereby it delivered already prepared menu
items to franchisees' cafes. The loss of that service
forced the Defendants to build a food preparation area at
substantial expense and inconvenience to their gym business.

10. A
third key term was the “protected territory” of
the Defendants' Stuart cafe that they specially had
negotiated with the Plaintiff. It prevented any competing
“3 Natives” cafe from opening within the city
limits of Stuart and Palm City. Nevertheless, in June 2018,
the Plaintiff allowed a franchisee to open a “3
Natives” cafe in Palm City and did so without
forewarning. Not only do the Defendants allege a breach of
the parties' “protected territory” agreement
(formalized as Exhibit A to the Franchise Agreement), but
opening the competing cafe harmed the Defendants'
business just as Mr. Bambino had conceded would happen. The
Defendants identify specific ways in which the Palm City
“3 Natives” cafe harmed its cafe. First, the
competing Palm City cafe benefitted from the marketing that
the Defendants already had undertaken (and paid for) in the
Palm City area. Second, the Palm City cafe
“cannibalized” the Defendants' sales, causing
the Defendants' income to decrease. Third, the Defendants
had to handle the complaints from customers of the poorly-run
Palm City cafe. Customers assumed that the Defendants were
responsible for it, too. Fourth, the Plaintiff became even
less attentive to the Defendants after it had opened the
competing (and allegedly contract-breaching) Palm City cafe.

11. The
Plaintiff alleges in turn that the Defendants breached the
Franchise Agreement's non-compete restrictive covenant.
The Plaintiff alleges that Defendants Miller and McLaughlin
incorporated a new business entity, “City Beets
LLC”, whose street address is the same as 3 Natives
Stuart, LLC's. The Plaintiff alleges that Ms. Miller and
Mr. McLaughlin formed City Beets LLC as part of scheme to
hide revenue and to compete with the “3 Natives”
...

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